Vancouver remains one of the country’s tightest markets for office space, although vacancy rates are edging up slightly, according to a national report released by commercial services real estate firm Cushman & Wakefield Canada.

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Vancouver remains one of the country’s tightest markets for office space, although vacancy rates are edging up slightly, according to a national report released by commercial services real estate firm Cushman & Wakefield Canada.

“There’s a lot of pent-up demand from users who can’t find space in the market they want to be in, which is downtown,” said Mark Chambers, C&W Vancouver’s senior vice-president, office leasing. The National Office Trends: Second Quarter Report noted that downtown Vancouver’s overall vacancy rate edged up to 3.7 per cent from 3.5 per cent last quarter, However, demand remains strong among tenants who want larger spaces.

“There’s really big interest in the new towers,” he said Tuesday. “There will be a lot of relief.”

Three new office towers are now being built in downtown Vancouver, with a combined office space of nearly 1.2 million square feet, are the B.C. Investment Management Corp.’s 25-storey project at 745 Thurlow St.; Oxford Properties’ 35-storey tower at 1021 West Hastings; and a 24-storey tower scheduled for occupancy in June 2014 that’s part of the Telus Garden project.

Another major development includes a planned $200-million, 30-storey office tower developed by Credit Suisse at Howe and Pender streets.

The report noted that the total office inventory in central Vancouver stood at 30.2 million square feet in the second quarter, with an average gross rent of $42.76 per square foot. That compares with 21.1 million square feet in the suburban inventory, with an average gross rent of $28.75 per square foot.

Chambers said the slight increase in the vacancy rate in the downtown core is insignificant.

“It’s gone up a little bit in the downtown market, which is just a blip,” he added. “You always have a little bit of movement. Companies aren’t downsizing. In fact, it’s the opposite. There’s great pent-up demand.”

According to the report, Class A space (the most prestigious offices) in the downtown core is virtually non-existent, with a vacancy rate of only 2.4 per cent. “Vancouver’s central business district remains one of Canada’s hottest markets.”

However, the report also noted that Metro Vancouver’s suburban markets saw a larger drop in demand in the second quarter, largely due to global economic concerns. “The vacancy rate climbed from 12.1 per cent in Q1 to 12.7 per cent this quarter; however this represents a slight decrease from the same period last year, where vacancy in the suburbs was at 13.1 per cent,” the release said.

Another factor affecting suburban markets, especially in Vancouver and Toronto, is a return to the downtown core by large organizations.

Nationally, the Cushman & Wakefield report concluded that the office vacancy rate fell to 5.0 per cent in the second quarter, down from 5.4 per cent in the first quarter.

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